Keppel DC REIT will acquire 100 per cent interest in two data centers in Singapore upon completion of the purchase of Keppel Ltd. (Connectivity Division)’s remaining stake in them. The contract, worth S$50.5 million (US$39.2 million) is expected to be completed by 1Q 2026. The two data centers are Keppel DC Singapore 3 (KDC SGP 3) and Keppel DC Singapore 4 (KDC SGP 4) in which Keppel currently holds 10 per cent and 1 per cent interest respectively.
According to a joint press release yesterday, these transactions are part of Keppel’s asset monetisation programme which will propel its announced monetisation in the year to date to over S$2.4 billion (US$ 1.86 billion).
Lee Kok Chew, Keppel’s Head of the Accelerating Monetisation Task Force, said, “Monetising our remaining interests in KDC SGP 3 and 4 reflects Keppel’s disciplined approach to capital recycling. This allows us to unlock value and redeploy capital to other opportunities across our integrated ecosystem, while enabling Keppel DC REIT to strengthen its long-term position in these quality data centre assets.”
For Keppel DC REIT, the acquisitions are expected to be immediately Distribution per unit (DPU) -accretive and will enhance total return to unitholders. On a pro forma basis, DPU for FY2024 would increase by 0.8 per cent from 9.451 cents to 9.525 cents. DPU is a financial metric used in real estate investment trusts (REITs) to measure the amount of income that is generated per unit of ownership.
The acquisitions will be funded by part of the proceeds from Keppel DC REIT’s recent preferential offering and issuance of Units for the acquisition fee to Keppel DC REIT Management Pte. Ltd., the Manager of Keppel DC REIT. Post acquisitions, Keppel DC REIT’s aggregate leverage is expected to improve from 29.8% to 29.5%[1], with healthy debt headroom of approximately S$944 million.
Loh Hwee Long, CEO of the Manager of Keppel DC REIT, said, “Acquiring full ownership of KDC SGP 3 and 4 strengthens Keppel DC REIT’s position in Singapore’s data centre market. Not only is this transaction in line with our value creation strategy, but it also reflects our commitment to deliver long-term value for Unitholders as data centre demand continues to grow.”
Post acquisitions, Keppel DC REIT’s assets under management (AUM) will rise by about 3.5 per cent from S$5.7 billion to S$5.9 billion, with the proportion of Singapore assets increasing from 57.8 per cent to 58.8 per cent of AUM and contribution from hyperscale clients increasing by 20 basis points from 69.3 per cent to 69.5 per cent of rental income.
KDC SGP 3 and KDC SGP 4 are carrier-neutral and purpose-built facilities providing dedicated colocation facilities spanning a combined lettable area of 139,469 sq ft. The two data centres are strategically located in Tampines, one of the main data centre hubs in Singapore, offering strong connectivity and infrastructure that are sought after by hyperscale clients.
Singapore-based Keppel is a global asset manager and operator while Keppel DC REIT is the first pure-play data centre REIT in Asia.